Global food prices continue surge in February

by Keith Nunes
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ROME — Global food prices continued to move upward during February, the eighth consecutive month prices have risen, according to the Food and Agriculture Organization of the United Nations’ Food Price Index. The index averaged 236 points in February, an increase of 2.2% from January.

The F.A.O. said it expects a tightening of the global cereal supply and demand balance in 2010-11. In the face of a growing demand and a decline in world cereal production in 2010, global cereal stocks this year are expected to fall sharply because of a decline in inventories of wheat and coarse grains. International cereal prices have increased sharply with export prices of major grains up at least 70% from February last year.

“Unexpected oil price spikes could further exacerbate an already precarious situation in food markets,” said David Hallam, director of the F.A.O.’s trade and market division. “This adds even more uncertainty concerning the price outlook just as plantings for crops in some of the major growing regions are about to start.”

The F.A.O. said it expects winter crops in the Northern Hemisphere to be generally favorable and forecasts global wheat production to increase by around 3% in 2011. The organization’s projection assumes a recovery in wheat production in major producing countries of the Commonwealth of Independent States. Conditions of winter crops in those countries have been reported to be favorable.

The latest estimate for the world cereal production in 2010 is 8 million tonnes more than was anticipated in December but still slightly below 2009, according to the F.A.O. The forecast for world cereal utilization in 2010-11 has been revised up by the F.A.O. to 18 million tonnes since December. The bulk of the revision reflects adjustments to the feed and industrial use of coarse grains.
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